Progress so far has been “glacial” because a narrative has taken hold in the national press of having to “switch off factories to keep the lights on”.
“We need to change the story on demand-side measures, stop seeing them as 1970s-type rationing and start seeing them as part of the future,” said former National Grid chief executive Steve Holliday.
Images of the three-day weeks of the 1970s – “people with their sandwich boxes in their hands and going home at two o’clock in the afternoon” – have become ingrained in the collective memory of Britain, according to Holliday: “That imagery has actually stuck with us for quite a long time.”
He argued that the word ‘response’ could even be dropped from the term DSR and replaced with ‘flexibility’: “That’s exactly what we need; a system that’s more flexible… Not responding to an emergency; just more flexible because that’s the way you’re going to get cheaper energy in the longer run.”
Holliday made the comments at event in London held by the Energy and Climate Intelligence Unit ahead of the publication of National Grid’s Winter Outlook later this week.
In November last year National Grid spent £1.05 million filling a 500MW supply shortfall during a Notice of Inadequate System Margin (NISM). The Demand Side Balancing Reserve was used cut demand by 43MW at a cost of just £25,000 to £30,000. According to analysis published by the think tank if DSR had been used to plug the entire gap the cost of balancing the system during the NISM would have been cut by a fifth.
“Supply-side measures are always more expensive than demand-side measures, which are bound to be cheaper, although they currently still need to be incentivised,” said Holliday.
Chris Kimmett, commercial director at DSR aggregator Open Energi, called for a “level playing field” for the technology: “The market favours existing power generators to a disproportionate extent. If DSR is allowed to compete on equal terms it will be a move towards the freer energy markets that we all want to see, as well as supporting British innovation and rewarding entrepreneurship.”
DSR aggregators should be given independent access to the wholesale and balancing markets to enable them to compete fairly with generators, according to a report in July by the Association for Decentralised Energy. They are currently only able to bid for one-year contracts in the capacity market but the report said they should be able to access the 15-year contracts available to new build generators. Enacting these changes could unlock almost 10GW of DSR capacity.